Balance of payments (BoP) accounts are an accounting record of all monetary transactions between a country and the rest

of the world.[1] These transactions include payments for the country's exports and imports of goods, services, financial capital, and financial transfers. The BoP accounts summarize international transactions for a specific period, usually a year, and are prepared in a single currency, typically the domestic currency for the country concerned. Sources of funds for a nation, such as exports or the receipts of loans and investments, are recorded as positive or surplus items. Uses of funds, such as for imports or to invest in foreign countries, are recorded as negative or deficit items. When all components of the BOP accounts are included they must sum to zero with no overall surplus or deficit. For example, if a country is importing more than it exports, its trade balance will be in deficit, but the shortfall will have to be counterbalanced in other ways such as by funds earned from its foreign investments, by running down central bank reserves or by receiving loans from other countries. While the overall BOP accounts will always balance when all types of payments are included, imbalances are possible on individual elements of the BOP, such as the current account, the capital account excluding the central bank's reserve account, or the sum of the two. Imbalances in the latter sum can result in surplus countries accumulating wealth, while deficit nations become increasingly indebted. The term "balance of payments" often refers to this sum: a country's balance of payments is said to be in surplus (equivalently, the balance of payments is positive) by a certain amount if sources of funds (such as export goods sold and bonds sold) exceed uses of funds (such as paying for imported goods and paying for foreign bonds purchased) by that amount. There is said to be a balance of payments deficit (the balance of payments is said to be negative) if the former are less than the latter. The two principal parts of the BOP accounts are the current account and the capital account. The current account shows the net amount a country is earning if it is in surplus, or spending if it is in deficit. It is the sum of the balance of trade (net earnings on exports minus payments for imports), factor income (earnings on foreign investments minus payments made to foreign investors) and cash transfers. It is called the current account as it covers transactions in the "here and now" - those that don't give rise to future claims.[2] The capital account records the net change in ownership of foreign assets. It includes the reserve account (the foreign exchange market operations of a nation's central bank), along with loans and investments between the country and the rest of world (but not the future regular repayments/dividends that the loans and investments yield; those are earnings and will be recorded in the current account). The term "capital account" is also used in the narrower sense that excludes central bank foreign exchange market operations: Sometimes the reserve account is classified as "below the line" and so not reported as part of the capital account.[3] Expressed with the broader meaning for the capital account, the BOP identity assumes that any current account surplus will be balanced by a capital account deficit of equal size - or alternatively a current account deficit will be balanced by a corresponding capital account surplus:

The balancing item, which may be positive or negative, is simply an amount that accounts for any statistical errors and assures that the current and capital accounts sum to zero. By the principles of double entry accounting, an entry in the current account gives rise to an entry in the capital account, and in aggregate the two accounts automatically balance. A balance isn't always reflected in reported figures for the current and capital accounts, which might, for example, report a surplus for both accounts, but when this happens it always means something has been missedmost commonly, the operations of the country's central bankand what has been missed is recorded in the statistical discrepancy term (the balancing item).[3] Main Components of a Balance of payments Account

I. Current Account (A) Goods General merchandise, goods for processing, repairs on goods produced in ports by carries and non-monetary gold.

(B) Services

Transportation, travel, communications, construction, financial and computer services, royalties and license fees, other professional and business services.

(C) Income

Direct investment income, portfolio investment income, and compensation of employees

(D) Current Transfers

Government current transfers, workers' remittances and other current transfers.

II. Capital and Financial Account 1. Capital Account (A) Capital transfers Government and private transfers of fixed assets and forgiveness of liabilities.

(B) Non-produced and Non-financial assets

Land and subsoil assets, patents, copyrights, trademarks, franchises.

2. Financial Account (C) Direct Investment External investments with lasting interest in enterprises.

(D) Portfolio Investment

External investments in securities and financial derivatives.

(E Other investment

External investments other than reserves, direct and portfolio investments. For example, short- and long-terms loans, trade credits, currency holdings and deposits, other accounts receivable and payable.

(F) Reserve Assets

Monetary gold, foreign exchange assets and other claims.

Balance of Payments: Standard Components 1. Current account

A. Goods and services a) Goods

1. General merchandise 2. Goods for processing 3. Repairs on goods 4. Goods procured in ports by carriers 5. Non-monetary gold 5.1 Held as a store of value 5.2 Other b) Services 1.Transportation 1.1 Sea transport 1.1.1 Passenger 1.1.2 Freight 1.1.3 Other 1.2 Air transport 1.2.1 Passenger 1.2.2 Freight 1.2.2 Other 10 1.3 Other transport (Rail, Road, etc.) 1.3.1 Passenger 1.3.2 Freight 1.3.2 Other 2.Travel 2.1 Business 2.2 Personal 3. Communication services 4. Construction services 5. Insurance services 6. Financial services (other than insurance) 7. Computer and information services 8. Royalties and license fees 9. Other business services 9.1 Merchanting and other trade related services 9.2 Operational leasing services 9.3 Miscellaneous business, professional, and technical services 10. Personal, cultural, and recreational services 10.1 Audiovisual and related services 10.2 Other cultural and recreational services 11.Government services, n.i.e. B. Income 1.Compensation of employees 2. Investment income 2.1 Direct investment 2.1.1 Income on equity 2.1.1.1 Dividends and distributed branch profits 2.1.1.2 Reinvested earnings and undistributed branch profits 2.1.2 Income on debt (interest) 2.2 Portfolio investment 2.2.1 Income on equity (dividends) 2.2.2 Income on debt (interest) 2.2.2.1 Bonds and notes 2.2.2.2 Money market instruments and financial derivatives 2.3 Other investment C. Current transfers 1. General government 2. Other sectors 11 2. Capital and Financial Account A. Capital Account 1. Capital transfers 1.1 General government 1.1.1 Debt forgiveness 1.1.2 Other 1.2 Other 1.2.1 Migrants transfers 1.2.2 Debt forgiveness

1.2.3 Other 2. Acquisition of non- produced non - financial assets B. Financial Account 1. Direct investment 1.1 Abroad 1.1.1 Equity capital 1.1.1.1 Claims on affiliated enterprises 1.1.1.2 Liabilities on affiliated enterprises 1.1.2 Reinvested earnings 1.1.3 Other capital 1.1.3.1 Claims on affiliated enterprises 1.1.3.1.1 Debt securities issued by affiliated enterprises 1.1.3.1.2 Other claims on affiliated enterprises 1.1.3.2 Liabilities to affiliated enterprises 1.1.3.2.1 Debt securities issued by direct investors 1.1.3.2.2 Other liabilities of direct investors 1.2 In reporting economy (Pakistan) 1.2.1 Equity capital 1.2.1.1 Claims on direct investors 1.2.1.2 Liabilities to direct investors 1.2.2 Reinvested earnings 1.2.3 Other capital 1.2.3.1 Claims on direct investors 1.2.3.1.1 Debt securities issued by direct investors* 1.2.3.1.2 Other claims on direct investors* 1.2.3.2 Liabilities to direct investors 1.2.3.2.1 Debt securities issued by affiliated enterprises* 1.2.3.2.2 Other liabilities to direct investors* 12 2. Portfolio investment 2.1 Assets 2.1.1 Equity securities 2.1.1.1 Monetary authorities 2.1.1.2 General government 2.1.1.3 Banks 2.1.1.4 Other sectors 2.1.2 Debt securities 2.1.2.1 Bonds and notes 2.1.2.1.1 Monetary authorities 2.1.2.1.2 General government 2.1.2.1.3 Banks 2.1.2.1.4 Other sectors 2.1.2.2 Money market instruments 2.1.2.2.1 Monetary authorities 2.1.2.2.2 General government 2.1.2.2.3 Banks 2.1.2.2.4 Other sectors 2.1.2.3 Financial derivatives 2.1.2.3.1 Monetary authorities 2.1.2.3.2 General government 2.1.2.3.3 Banks 2.1.2.3.4 Other sectors 2.2 Liabilities 2.2.1 Equity securities 2.2.1.1 Banks 2.2.1.2 Other sectors 2.2.2 Debt securities 2.2.2.1 Bonds and notes 2.2.2.2.1 Monetary authorities 2.2.2.2.2 General government 2.2.2.2.3 Banks 2.2.2.2.4 Other sectors 2.2.2.2 Money market instruments 2.2.2.2.1 Monetary authorities 2.2.2.2.2 General government 2.2.2.2.3 Banks 2.2.2.2.4 Other sectors

2.2.2.3 Financial derivatives 13 2.2.2.3.1 Banks 2.2.2.3.2 Other sectors 3. Other investment 3.1 Assets 3.1.1 Trade creditors 3.1.1.1 General government 3.1.1.1.1 Long-term 3.1.1.1.2 Short-term 3.1.1.2 Other sectors 3.1.1.2.1 Long-term 3.1.1.2.2 Short-term 3.1.2 Loans 3.1.2.1 Monetary authorities 3.1.2.1.1 Long-term 3.1.2.1.2 Short-term 3.1.2.2 General government 3.1.2.2.1 Long-term 3.1.2.2.2 Short-term 3.1.2.3 Banks 3.1.2.3.1 Long-term 3.1.2.3.2 Short-term 3.1.2.4 Other sectors 3.1.2.4.1 Long-term 3.1.2.4.2 Short-term 14 3.2.2.2.2 Short-term 3.2.2 Loans 3.2.2.1 Monetary authorities 3.2.2.1.1 Use of Fund credit and loans from the Fund 3.2.2.1.2 Other long-term 3.2.2.1.3 Short-term 3.2.2.2 General government 3.2.2.2.1 Long-term 3.2.2.2.2 Short-term 3.2.2.3 Banks 3.2.2.3.1 Long-term 3.2.2.3.2 Short-term 3.2.2.4 Other sectors 3.2.2.4.1 Long-term 3.2.2.4.2 Short-term 3.2.3 Currency & Deposits 3.2.3.1 Monetary authorities 3.2.3.2 Banks 3.2.4 Other liabilities 3.2.4.1 Monetary authorities 3.2.4.1.1 Long-term 3.2.4.1.2 Short-term 3.2.4.2 General government 3.2.4.2.1 Long-term 3.2.4.2.2 Short-term 3.2.4.3 Banks 3.2.4.3.1 Long-term 3.2.4.3.2 Short-term 3.2.4.4 Other sectors 3.2.4.4.1 Long-term 3.2.4.4.2 Short-term 4 Reserve assets 4.1 Monetary gold 4.2 Special drawing rights 4.3 Reserves position in the Fund 4.4 Foreign exchange 4.4.1.Currency and deposits 4.4.1.1 With monetary authorities 4.4.1.2 With banks 4.4.2 Securities 4.4.2.1 Equities 4.4.2.2 Bonds and notes

3.1.3 Currency & Deposits 3.1.3.1 Monetary authorities 3.1.3.2 General government 3.1.3.3 Banks 3.1.3.4 Other sectors 3.1.4 Other assets 3.1.4.1.Monetory authorities 3.1.4.1.1 Long-term 3.1.4.1.2 Short-term 3.1.4.2.General government 3.1.4.2.1 Long-term 3.1.4.2.2 Short-term 3.1.4.3 Banks 3.1.4.3.1 Long-term 3.1.4.3.2 Short-term 3.1.4.4 Other sectors 3.1.4.4.1 Long-term 3.1.4.4.2 Short-term 3.2 Liabilities 3.2.1 Trade creditors 3.2.2.1 General government 3.1.2.1.1 Long-term 3.1.2.1.2 Short-term 3.2.2.2 Other sectors 3.2.2.2.1 Long-term

4.4.2.3 Money market instruments and financial derivatives 4.5 Other claims

Does FDI accelerate the rate of economic growth limitations of FDI